How much will your tax refund be? Depends on many factors

Recently I have had two clients who were in to pick up their completed tax forms and they were surprised and frustrated with the balance due on their returns. In both cases the clients had taxable investment accounts that were managed by a financial advisor. In both cases due to the strong market growth this past year they experienced significant capital gains due to investment sales. These sales created taxable income and the corresponding income tax obligation greater than they were expecting and greater than they have recently experienced.

The amount of a taxpayer’s refund or balance due is the difference between their income tax obligation and the sum of income tax withheld, estimated tax payments made and credit carried forward from previous years.